15 Days Price Change
Market Cap ₹ 22279Cr.
Current Price ₹ 1750
Lot Size 25
52W High ₹ 1750
EPS -15.07
P/B 4.7
Face Value 10
Debt to Equity 4.61
Stock P/E -116.1
Book Value ₹ 374.7
Company
52W Low ₹ 1100
Demat Account Both
ISIN INE957N01016
Valuation
No. of Shares 12.73Cr.
Industry Overview:
The NBFC segment in the Banking and Financial Services sector plays an immense role in the economy due to their diversity and reach to middle income households. As per RBI, as of March 2021, the total asset worth of NBFCs was 54 lakh crores which together forms up the 25% of the total assets held up in the entire banking sector in India. Past data suggests that the sector has grown with an average growth rate of 18% approx. for the last five years. This fact release from RBI multifolds the importance of such NBFC companies and improves their future forecast of being into the business.
Company Overview:
Hero FinCorp is a Non-Banking Financial Company (NBFC) started in December 1991 under the leadership of Late Sh. Brijmohan Lall Munjal, a group founder. It was formerly known as Hero Honda FinLease Ltd. and since July 2011,operates under the name of Hero Fincorp Ltd. The company is primarily engaged in disbursement of “hassle-free” corporate and retail loans at competitive rates. It has subsidiaries such as Hero Housing Finance Ltd. which help satisfy one of the basic needs of an individual i.e., House. The journey of Hero Fincorp Ltd, since incorporation has been quite impressive from getting an equity of 106 crores in Feb 2013 to crossing happy 5 million plus customers in 2020.
The vision of the company is to become a behemoth of financial services on which individuals can rely on and can get credit easily. On the other hand, the mission includes being transparent in its process which would help individuals to trust their loan partner.
Business Segment:
Hero Fincorp primarily operates in India. The corporate office and operations center is located in New Delhi. It operates through dealers across India based on the specified loan portfolio. The network of dealers is spread across all states and UT giving an edge to know its target audience locally.
The business model of Hero Fincorp is to provide the individuals with loans at competitive and affordable interest rates in one click with minimum paperwork involved. The NPAs of such business models are generally less than that of commercial banks due to involvement of lower amount loans.
The product portfolio of Hero Fincorp Ltd. is shown above. It can be broadly classified into two categories i.e., Retail and Corporate Loan which is further divided into category wise. Besides, it is also engaged in providing instant digital cash instant loan and home loan. The diversified product portfolio enables the Inc. to reach various segments of the consumer, especially, in the middle income category.
Loan Assets Mix (%. INR Crores)
Shareholding Pattern:
Source: Annual Reports
Category-wise Shareholding Distribution (FY20)
Source: Annual Reports
The shareholding pattern of Promoters spiked from 7.2 cr shares to 10.1 cr shares. On the other hand, the shareholding of non-promoters also increased from 2.06 cr shares to 2.60 cr shares in the span of 5 years. The graph portrayed above is a glimpse of the percentage of shareholding of promoters since 2017. The overall trend remained positive and constant for the past two years. The increasing shareholding figure indicates increased trust of the promoters in the business and helps to gain investors confidence in the business.
Peer Comparison:
NBFC being a competitive segment to operate, there exists strong competitive players well established in the market. Some of the major peers are listed below:
Tata Capital Financial Services Limited
Aditya Birla Finance Limited.
Adani Capital Private Limited.
Cholamandalam Investment & Finance Company Ltd.
The key players listed above possess a diversified range of business under their parent company. The basic peer to peer comparison is shown below:
Return on Equity %
Gross NPA %
Capital Adequacy Ratio %
Cost to Income Ratio %
Return On Asset %
Financials
Balance Sheet:
Consolidated Balance Sheet (All amounts are in Rupees Crores except share data and unless otherwise stated)
| Particulars | 31-Mar-21 | 31-Mar-20 | 31-Mar-19 | 31-Mar-18 |
| Assets | ||||
| Financial Assets | ||||
| Cash and cash equivalents | 1106.87 | 2343.94 | 106.68 | 0.69 |
| Bank balance other than cash and cash equivalents | 116.13 | 0.52 | 0.55 | 0.48 |
| Trade receivables | 7.98 | 7.87 | 4.34 | 5.78 |
| Loans | 26194.69 | 24263.09 | 19771.2 | 13158.06 |
| Investments | 1917.24 | 78.84 | 811.98 | 53.72 |
| Other financial assets | 113.11 | 32.74 | 51.62 | 41.2 |
| Non-financial assets | ||||
| Current tax assets (net) | 42.43 | 40.84 | 16.39 | 10.12 |
| Deferred tax assets (net) | 341.04 | 254.55 | 176.63 | 123.14 |
| Property, plant and equipment | 53.05 | 72.27 | 82.08 | 96.26 |
| Right-of-use assets | 40.15 | 56.9 | - | - |
| Capital Work in progress | - | 0.04 | - | - |
| Intangible assets | 22.54 | 19.32 | 21.69 | 14.49 |
| Intangible assets under development | 0.62 | 0.61 | 0.16 | - |
| Other non-financial assets | 40.18 | 27.6 | 25.41 | 18.61 |
| Total assets | 29996.03 | 27199.13 | 21068.73 | 13522.55 |
| Liabilities and equity | ||||
| Liabilities | ||||
| Financial liabilities | ||||
| Trade payables | ||||
| Total outstanding dues of micro enterprises and small enterprises; and | 0.88 | 1.3 | 0.02 | 0.08 |
| Total outstanding dues of creditors other than micro enterprises and small enterprises | 256.79 | 167.36 | 119.58 | 72.77 |
| Debt securities | 4235.94 | 5253.94 | 6852.95 | 5672.09 |
| Borrowings (other than debt securities) | 19156.51 | 16130.76 | 9334.69 | 4813.65 |
| Subordinated liabilities | 642.91 | 573.06 | 448.78 | 300 |
| Lease liabilities | 44.37 | 59.02 | ||
| Other financial liabilities | 595.58 | 405.62 | 569.42 | 359.51 |
| Non-financial liabilities | ||||
| Current tax liabilities (net) | 8.6 | 60.14 | 33.53 | 14.87 |
| Provisions | 41.69 | 34.31 | 24.05 | 14.9 |
| Other non-financial liabilities | 45 | 42.28 | 33.85 | 26.23 |
| Total liabilities | 25028.27 | 22727.79 | 17426.87 | 11274.1 |
| Equity | ||||
| Equity share capital | 127.31 | 121.54 | 114.15 | 98.45 |
| Other equity | 4840.45 | 4349.8 | 3527.71 | 2150 |
| Total equity | 4967.76 | 4471.34 | 3641.86 | 2248.45 |
| Total liabilities and equity | 29996.03 | 27199.13 | 21068.73 | 13522.55 |
Income Statement:
Consolidated Statement of Profit and Loss (All amounts are in Rupees Crore except share data and unless otherwise stated)
| Particulars | 31-Mar-21 | 31-Mar-20 | 31-Mar-19 | 31-Mar-18 |
| Income | ||||
| Revenue from operations | ||||
| Interest income | 3877.79 | 3417.56 | 2247.51 | 1533.88 |
| Dividend income | 0.74 | 0.74 | 0.5 | 0.01 |
| Profit on sale of investments | 23.94 | 58.16 | 47.28 | 3.64 |
| Rental income | 5.84 | 10.89 | 17.48 | 22.85 |
| Net gain on fair value changes | 22.66 | - | 2.63 | 3.19 |
| Insurance commission | 13.17 | 11.09 | 0.48 | - |
| Others charges | 333.94 | 301.42 | 202.59 | 130.94 |
| Total revenue from operations | 4278.08 | 3799.86 | 2518.47 | 1694.51 |
| Other income | 55.44 | 55.32 | - | - |
| Total income | 4333.52 | 3855.18 | 2518.47 | - |
| Expenses | ||||
| Finance costs | 1710.31 | 1629.22 | 1124.71 | 683.66 |
| Impairment allowance on loans | 1417.74 | 649.86 | 174.3 | 136.15 |
| Employee benefits expenses | 285.61 | 302.76 | 237.55 | 147.61 |
| Depreciation and amortization | 35.21 | 36.33 | 24.88 | 26.52 |
| Other expenses | 813.58 | 788.22 | 566.19 | 488.21 |
| Total expenses | 4262.45 | 3406.39 | 2127.63 | 1482.15 |
| Profit before tax | 71.07 | 448.79 | 391.04 | 212.36 |
| Tax expense: | ||||
| (i) Current tax | 109.15 | 248.48 | 198.05 | 125.44 |
| (ii) Tax adjustment relating to earlier year | -3.17 | -0.12 | - | -3.25 |
| (iii) Deferred tax (credit) (net) | -86.53 | -77.6 | -52.76 | -52.76 |
| Total tax expense | 19.45 | 170.76 | 145.29 | 69.43 |
| Profit after tax | 51.62 | 278.03 | 245.75 | 142.93 |
| Other comprehensive income/ (loss) | ||||
| Items that will not be reclassified to profit or loss : | ||||
| Remeasurement of (losses) on defined benefit plans | -0.12 | -1.05 | -2.09 | -0.74 |
| Income tax impact on above | -0.04 | 0.32 | 0.73 | 0.26 |
| Other comprehensive income/ (loss) for the year, net of tax | -0.16 | -0.73 | -1.36 | -0.48 |
| Total comprehensive income/ (loss) for the year, net of tax | 51.46 | 277.3 | 244.39 | 142.45 |
| Earnings per equity share | ||||
| Profit for the year attributable to | ||||
| Equity Shareholder of Parent | 51.62 | 278.03 | 245.75 | 142.93 |
| Total Comprehensive Income of the year, net of tax | ||||
| Equity Shareholder of Parent | 51.46 | 277.3 | 244.39 | 142.45 |
| Earnings per equity share | ||||
| Equity Shareholder of Parent for the year | ||||
| Basic (Rs.) | 4.23 | 24.18 | 23.78 | 15.32 |
| Diluted (Rs.) | 4.22 | 24.01 | 23.73 | 15.3 |
News & Announcements:
As per the latest press release by Hero Fincorp, a corpus of INR 2000 crores has been raised of Growth Capital from Apollo, Hero Motocorp and other entities. This fundraise would help the company to work upon diversification of its product portfolio across multiple segments.
On July 20, 2018, a corrigendum was issued by the company. As per the corrigendum, rights issue was made for a total amount of INR 11,81,34,75,000 to the existing shareholders.
It became the first and foremost company which raised a Secured Overnight Financing Rate abbreviated as SOFR by raising a corpus of INR 2631 crores approximately at 168 basis point higher than SOFR.
The NBFC aims to serve more than 15 million customers by the end of fiscal year 2025.
Out of the fresh fund raise, Hero Motocorp is expected to invest about 700 crores in its financial arm Hero Fincorp.
Future vision insights of Jt. MD & CEO, Abhimanyu Munjal: “This fresh capital infusion will fuel our growth to USD 10 Billion in Assets, and enable us to serve over 15 Million customers by FY-25. This is in keeping with our mission of Empowering Every Indian’s Dream of Upward Mobility. I am excited to partner with Apollo in this journey as they bring significant experience and relevant domain knowledge; and I am sure this strategic partnership would be mutually beneficial to both groups.”
Valuation:
Hero Housing Finance Ltd, a housing arm of Hero Fincorp Ltd, currently holds assets under management (AUM) of INR 2369.20 crores in the FY 2020-21 from INR 1793.06 crores in the FY 2019-20.
The total loan disbursements stood at Rs.13822 cr. in FY21 from Rs.17829 cr. in FY20. This primarily owed to the impact of Covid-19 and nationwide lockdown across the country.
The loan assets reported in FY21 were Rs.25121 cr. against Rs. 23389 cr in FY20.
It has enabled a strong revenue of 4045.93 crores in FY 2020-21, a growth of 10.44% from the previous financial year 2019-20.
The loan asset mix percentage has increased in the retail segment as compared to other categories from 31% in FY’17 to 56% in FY’21.This indicates a strong rural and urban demand and forms a major share of its customer base.
The profit after tax has increased over the years. However, spread of Covid-19 across the globe has hit the operations which is indicative from PAT figures in FY '21.
It aims to grow USD 10 Billion in Assets.
The disbursement of loans has seen a sharp increase since FY ‘17. It increased from 6735 crores to 17,829 crores in FY ‘20 and then decreased to 13822 crores in FY ‘21 primarily due to suppressed demand and income effect in the pandemic. The business cycle fluctuation during this suppressed time hit the operations and the effect of which can be witnessed on the financials.
The capital adequacy ratio is consistently above the threshold of RBI guidelines, which is an add-on to the business.
Key Parameters:
| Particulars | FY21 | FY20 | FY19 | FY18 |
| Gross NPA to Loan Assets | 7.40% | 6.50% | 4.50% | 4.10% |
| Credit Cost to Average Assets | 5.60% | 2.80% | 1.00% | 2.00% |
| Profit After Tax (In Crores) | 70.6 | 310.2 | 268.4 | 145.8 |
| Debt to Equity Ratio | 4.3 | 4.5 | 4.5 | 4.8 |
| Capital Adequacy ratio % | 19.7 | 19.6 | 19.2 | 18.7 |
| EPS | 5.8 | 27 | 26 | 15.6 |
| Credit Cost to Avg. Asset | 5.6 | 2.8 | 1 | 2 |
| Cost of Borrowing % | 7.8 | 8.5 | 8.3 | 8 |
| Opex to Average Asset % | 4.2 | 4.6 | 4.7 | 5.2 |
Sources:
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Hero Fincorp Limited's unlisted shares can be easily purchased at Sharescart.com by following a few easy steps. Given below are the steps involved in the buying of these shares:
Step 1 - Confirmation on the number of shares you want to purchase of Hero Fincorp Limited at a trading price.
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Hero Fincorp Limited's unlisted shares can be easily sold at Sharescart.com by following a few easy steps. Given below are the steps involved in the of selling of these shares:
Step 1- Confirmation on the number of shares you want to sell of Hero Fincorp Limited and at what price you want to sell.
Step 2- At Sharescart, we will find a suitable buyer for you according to your requirements and if you accept the trade we will move on to the transfer and the payment aspect of the trade.
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Over the years the minimum ticket size for investment has dropped as more and more people have started investing in the Unlisted market. Currently, the minimum ticket size for Hero Fincorp Limited is between 30K to 50K.
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If you want to check your shares in NSDL and CDSL you need to download the application (NSDL Speede App or CDSL myeasi).
The taxation on the Hero Fincorp Limited shares may vary depending on 2 Factors:
Short-term capital
Unlisted shares - In unlisted shares, the taxation of short-term capital gain i.e. less than 24 months is taxable according to the investor's income tax slab.
Listed Shares - In listed shares, the taxation for short-term capital gains i.e. less than 12 months is at 15%
Long-term capital
Unlisted shares - The taxation for long-term capital gain i.e. more than 24 months is taxable at 20% with indexation benefits.
Listed Shares - The taxation for long-term capital gains i.e. more than 12 months is at 10% after an exemption of 1 lakh. There are no indexation benefits in listed shares.
According to the current rule issued by SEBI last year in August 2021, the lock-in period is brought down from 1 year to 6 months. This was done to entice more investors to invest their money in pre-IPO companies and startups. The lock-in period of Hero Fincorp Limited varies depending on which type of investor you are:
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